Two months ago this morning, the twin towers of the World Trade Centre rose proud, audacious and beautiful from the New York skyline. By midday they had vanished into the dust of their own stone, into a mass grave. All that remained was an inferno of death and dust on an accursed terrain called Ground Zero.

Two months on, Ground Zero is all crooked, cruel ruins bayoneted on to steel mesh. Under the harsh glare of floodlights, the arm of a heavy crane lifts another limb of incinerated steel from the dunes of rubble.

There is a flare, a burst of flame - for the buried fire still burns white-hot - and a pall of ghastly black smoke rises into the night, blocking the view of the illuminated Empire State Building. The stench of the plume is sickly-sweet; everyone knows what it is but no one says so. Only: 'this is how Auschwitz must have stunk only diluted,' as one police forensic scientist remarked. 'Fifteen hundred degrees down there,' says a fireman, 'and still burning'.

Ground Zero began as a shrine to the victims of 11 September. But its story has twisted and warped, not unlike the landscape. The 'twin towers' of heroism - police and firemen - have come to blows, exchanging bruises with arrests. Tensions involving the fireman have led to the resignation of the exhausted fire chief, Thomas von Essen, and the system set up to aid victims and their families - many of whom have seen little or nothing of the millions donated - has turned into a scandal that led the director of the Red Cross to resign. The place has become a cauldron of toxins, poisonous dusts and powdered metals catching the morning sun and belching into the Hudson river.

The numbers of missing-presumed-dead fluctuate wildly as unofficial calculations grate against those of the authorities. Only genetic analysis can provide an answer, and even the most ambitious forensic DNA project ever mounted faces the problem of tainted, potentially useless material. While human remains smoulder, lawyers wage high-fee warfare over who should pay how much and for what in al-Qaeda's bloody wake.

The men who once worked in frenzied chain gangs now labour mostly in silence, apart from the odd cell phone call across the 'buddy system'. On the edge of Ground Zero is the Dakota Roadhouse, where men gather to discuss two months of change. 'Nowadays we talk less, work harder and don't feel like heroes any more,' says Tony Castelnuovo, heavy plant driver from New Jersey. 'At first it was like the world was on our shoulders like we were the guys. Now it's like a job that'll never be done.'

Glen from Boston drifted to Ground Zero on 13 September 'to become a New Yorker'. He uses his expertise in the construction industry to tunnel inside the wreckage - 'I look at it from the inside.' Among the shards, Glen sees steel crosses. Are you a Christian? He pauses, harvesting another beer. 'Yes.' He has been 'in construction for 30 years 'and I save lives'. Now he is retrieving nothing more than 'bits of people'. What's down there in the furnace of Ground Zero? 'Nothing... someone screwed up - don't ask me who.'

The search for remains must continue, says Matt Newman, crane operator. There was indeed a grisly find on 21 October - identifiable remains of nine humans. The pieces of charred flesh were covered with American flags and ceremonially stretchered out past a line of saluting workers.

At the time of a Mass amid the mountains of dust, the missing stood at 4,470, with 460 bodies recovered. But a world used to computer exactitude may never know how many perished. Companies and organisations feared to have sustained the highest losses count only 2,405 - half what was originally feared. The police maintain a missing-or-dead figure of 4,764. 'As long as the process is under way,' says Thomas Antenen, deputy police commissioner, 'the numbers are going to be refined.'

With bodies barely existent in the furnace, and identification using tattoos or dental records impossible, experts estimate a million DNA samples will have to be tested and that could take two years.

After the disaster, the world's largest morgue was a complex of refrigerated units covering several blocks - the beginning of the largest and most traumatic DNA project in history. 'It's massive,' says chief forensic officer Robert Shaler. 'We've never done anything like this before. I don't know of anybody that's ever been faced with this.'

Bruce Kane of Englewood, New Jersey, held a memorial service on 30 September for his missing son Howard, fearing he'd never have a body to bury. But he learnt two weeks ago that Howard was one of the first victims to be identified through DNA matching. It was a relief, he said, 'like I got my son back to bury. It brings closure, if there is such a word. At least we can put him to rest.'

The last remaining essence of those lost is sent to a laboratory at the foot of the Wasatch Mountains in Utah, where thousands of bar-coded vials pass from one high-speed robotic processor to the next as supercomputers decode genetic footprints of the clear fluids inside. 'You look at these samples, and you try to deal with the magnitude of what's behind them. Sometimes it's easier just to think of them as numbers,' says Benoit Leclair, a scientist with Myriad Genetic Laboratories, the company contracted to identify the remains.

On 2 November, the collision between raw emotion and bitter reality erupted into violence at Ground Zero, police officers and firemen setting upon one another. A dozen firemen were arrested and several officers injured after the city authorities reduced the number of Fire Department rescue workers, although the remains of only 91 of the missing 343 firefighters had been recovered.

Some firefighters said the decision to reduce their numbers from 60 to 24 was directly connected to the excavation of more than $200 million in gold bullion two days earlier. 'We're being disrespected. Two days after they find the gold, we're pulled off the job,' said fireman Mike Daly of Engine 280. 'The city is more concerned with gold than people.' Others said the city wanted to speed up the removal of debris to save money.

'We're on a mission, and we won't leave until it's done,' insisted fireman Chuck Horack. 'We see the site as sacred ground. Our brothers are still in the debris. No one can ever know how important it is to bring their husband home to a widow.' Mayor Giuliani launched a savage attack on the firemen, saying their actions were 'sinful'. 'They have absolutely no monopoly in caring about the people there,' he said.

Predatory packs of 'Sex and the City' women regard a firefighter as a prize conquest. They hang round firehouses, offering gifts and attention. 'I can't go a day without having to hide from some woman coming round the firehouse,' said a firefighter already spoken for. 'I just put my hood up and cross the road.'

Firefighters admit the strain on their emotions has not been helped by the media and public elevating them to the status of celebrities. 'Firefighters are pretty humble guys but this hero worship is making life very hard,' said one. 'When I saw firefighters on the cover of Vanity Fair I thought: "Oh-oh, this is gonna get bad"... firefighters don't read Vanity Fair, they read Sports Illustrated and Playboy.'

Of the disputes raging at Ground Zero, none is more pressing than the disbursement of more than $1.2 billion raised by charities for the families of victims. The charities collecting donations have no system for co-ordinating payments, making it difficult to track who has received assistance and who has not.

The Red Cross has faced questions about $550m raised in disaster relief. Two weeks ago, US Red Cross president Bernadine Healy was forced to resign after it was revealed the organisation had withheld more than $264m raised for victims' families.

While Healy argued that the funds should be used for victims of future terrorist attacks, Congress accused the Red Cross of misleading millions of donors believing their money would be used directly to relieve victims. Michigan Representative Bart Stupak accused the agency of using the terrorist attacks to serve its own needs, such as improving its telephone and technology systems and building its reserve of blood.

While some wait to receive money, others fight to keep what they have and make more. Legions of lawyers are now locked in combat over who will bear the burden of destruction and the costs of reconstruction. No one wants to face a flood of claims from victims and bereaved; but no bank, investor or developer wants to miss out on one of the biggest insurance payouts of all time.

The pivotal legal technicality mocks the tragedy of the twin towers: whether the attack constituted one atrocity (entitling leaseholder Larry Silverstein to $3.6 billion in insurance coverage) or two separate events (enabling him to make claims of $3.6bn apiece).

A Bill on airline safety passed by Congress last week also protected Silverstein and the owner of the World Trade Centre, the New York/New Jersey Port Authority, from claims by victims and families. Silverstein's cause was won with the services of Jack Quinn, former White House counsel who organised the pardon of fugitive tycoon Marc Rich by outgoing President Bill Clinton.

One legal challenge to Silverstein has already been made: by the Swiss Reinsurance company, seeking to cap the amount of its own liability.Swiss Re stands to pay the biggest share of legally approved losses, $7.2bn. Some 20 other insurance companies are involved, two of them apparently planning to reduce their share through legal action: Lloyds of London and Munich Reinsurance.

An old public relations hand, Howard Rubinstein - with Rupert Murdoch, the New York Yankees and Empire State Building in his portfolio - is trying to win a central role for Silverstein in the rebuilding of a new World Trade Centre to rise, phoenix-like, from Ground Zero. Silverstein has joined in unlikely alliance with his landlord, the Port Authority, and speaks of his ambitions with apocalyptic zeal: 'There's no way I could not go forward and build this thing. What these terrorists have tried to do is destroy the symbol of New York, and I can't handle that.'

The air is filled with toxic chemicals and metals - dioxins, PCBs, benzene, lead, sulphur dioxide, copper, chromium and others. Benzene is especially noxious, with the ability to cause bone marrow cancer and leukemia.

And yet, the most remarkable thing about the phenomenon of Ground Zero is that it grinds on. An entire civilisation passes through the tent established by the Salvation Army to feed hundreds of relief workers each day: blacks, whites, Latinos, asians, arrayed in front of a heap of macaroni salad, hands outstretched with trays like an advertisement for New York multiculturalism.

An FBI agent stands next to a Polish immigrant dressed in a protective asbestos suit; customs officers, police patrolmen, Mexican labourers, environmental health monitors, firemen, all thrown together in the same queue waiting for the same thing: lunch at Ground Zero, served in a 'kitchen' of several long tables by an assembly line of volunteers.

Another lineup of tables offers eyewash, footpads, hand creams, aspirins and other health items. In this suddenly egalitarian society, all volunteers - Salvation Army Christians, musicians and a Veterans Administration orderly - are equal. The publisher of the Miami Herald, visiting New York, hands out eyewash and alcohol swabs, unloads trash bins, refills a huge coffee urn.

Some of downtown's most famous restaurants have taken a stab at cooking for relief workers; the renowned Boulez is an assiduous presence. Its tent looks similar to that of the Salvation Army, but the food is much better - couscous, fettucini and other delicate confections. Boulez became the desired celebrity relief destination; Candice Bergen found herself obligingly mopping the floor.

Wake up anywhere south of Canal Street, and there's that sickening smell coming through the window, now a routine part of daily life.